What to do when 0% interest is up.

[MishMashMosher]

I've messed up slightly and it turns out our 0% interest runs out a few months earlier than I thought. I'd set our budget/repayments so that we would have paid the whole thing off before we had to start paying interest.

Anyway. We will have just over £600 left over. Obviously I realise that we could just pay it off in one chunk at the end or increase our monthly repayments but we are also saving right now so if I can I'd rather not.

I keep reading about balance transfers. Would you say this is a good option? We currently pay £125 a month so would only extend our debt for a few months but would still enable us to not reduce the amount we are saving every month.

What would you do?

What percentage are your savings earning?

Just be careful as balance transfers often come with an associated cost/fee you need to pay.

Pause your saving. Pay off your debt. You’ve also got a couple of months so I’d eBay everything I could to see if I could pay the £600 off so you don’t have to pause your savings.

You could try the hsbc card - it pays you £25! And transfers are free (you need to check this otherwise your interest on your savings will be wiped out by the transfer fee)
I opened an hsbc card though and it took 2 months for the account to open! So beware timelines with them

You were doing so well at paying off debt. So pay it now, use the savings to pay either all of it or the £600 you are under on your calculations.

Having some savings for emergencies whilst you are paying off debt is a fantastic idea. £500-£1000 is probably all you need to stop you taking out debt if something happened such as needing an emergency plumber, new tyre, etc.

If you hunt around there are a few cards where it is a 0% balance transfer fee and 0% during the term of the card. But you do have to really hunt for them.

But if you have savings surely it makes much more sense to just pay it off??

Assuming your interest on the debt is around 18-23% Apr, unless your savings are earning that (they aren't) the money is worth more being used to pay the debt.

For the additional hassle, credit checks and potential fees the interest on your savings - probably only £2 or £3 (5% Apr) doesn't seem worth it.

Savings will be on less than 3%
Card will become over 18%
Its a no brainer - use the savings to pay off the card and then replenish the savings

For a couple of months and £600 it's not worth transferring to a new 0% credit card - most will charge you a transfer fee e.g. 3-4% and your savings will only be earning that much so it would be pointless.

Or you could get a 0% spending card for the months you are short, put all your regular spending on that for a month or two to free up the cash to pay off the credit card on time.

But honestly, just pay a bit more now or take the cash out of savings at the end of the 0% period and pay it off. Not worth fannying about, really.

Santander do a no fee balance transfer. There's also the HSBC cashback one, or Sainsbury s might do one where you get nectar points that offset the fee.